What Bankruptcy Trustees Look for in Audit Documents

What is the Trustee Looking for

There are requirements for audit documents when filing bankruptcy in Kentucky. In this article, we teach you about what bankruptcy trustees look for in audit documents. The reason for submitting these documents to the bankruptcy trustees is because it’s their job to look for property that they can take from you. For instance, perhaps you did a transfer of property to relatives just before filing. Or, maybe your property exceeds the exemptions that control what you can keep in Chapter 7 or 13.

What the Bankruptcy Trustee Looks for in the Audit DocumentsWhat Bankruptcy Trustees Look for in Audit Documents

Again, Chapter 7 or Chapter 13 bankruptcy trustees must check all documents to find income, property, or transfers of property. Interestingly, the trustees receive a small fee for every filing they review. But the trustees also receive pay for any property they seize.

Problems arise if your bankruptcy filing fails to provide an accurate and easy-to-understand petition. When that happens, it causes the bankruptcy trustees extra work and might also cause problems for the debtor.

List of Audit Documents and What the Bankruptcy Trustees Expect

Audit Documents

What Bankruptcy Trustees Expect & the Kentucky Law

What to Do or Actions to Take


Homes can be taken if the Mortgage and deed are not properly or timely filed. It is rare but banks make mistakes in closing loans

Mortgages must be filed within 30 days after the property was purchased or 10 days after refinancing. But the trustee only has this power if the home was purchased within 90 days of filing bankruptcy. Always wait until 90 days after purchasing a home to file bankruptcy.

Car Titles

Car titles are commonly taken if liens are not properly recorded or not filed in a timely manner.

If no lien was recorded or if you bought the car within 90 days of filing bankruptcy and the lien filing was not recorded in 30 days the Trustee owns the car. Check car titles to make sure the lien was recorded. Also, check to make sure the lien filing was recorded within 30 days after you bought it if you purchase a car within 90 days of filing bankruptcy.

Bank Accounts

Bank accounts are not often taken but Indiana only allows you 300 dollars. Kentucky has larger exemptions.

Bank records may show improper payments or transfers to family members. If you have too much in the bank when filing bankruptcy you may lose it. Keep a minimum balance until you get a bankruptcy filing notice. However, Kentucky has large exemptions, and taking money from a bank account is now rare.

Income Tax

Tax refunds are rarely taken. But they are used to verify income to force people into filing Chapter 13. In Indiana, they take amounts over $300 dollars because their exemptions are low.

Taxes are used to verify income and see if you need to be in Chapter 13. The unearned income child credit part of your refund is a welfare benefit and not normally attachable. The remainder of your income tax refund is an asset. Plan your tax refund and filings carefully. If you receive a large refund, you may lose it. If you had a sudden drop in income, you must explain it. The US Trustee often objects to you filing chapter 7 if you had a high income and looks at deductions to find unreported or transferred property.

Prior Six Months Paystubs

Prior six months are now required or you can submit a statement of income from your job.

Test for income and whether or not you need to be in Chapter 13

Payment History

Payment histories to prove expenses.

Recent expenses such as Charitable contributions, 401k deductions, and private school expenses that were added just before filing are not allowable. High Expenses such as $800 Per month for medical for a family of three requires documentation.


Resources for Bankruptcy

Louisville Kentucky Bankruptcy Forms

Bankruptcy Manual

Other Related Information

Mortgage Modification Checklist

Debt Settlement Relief Louisville Kentucky Attorney

How to Keep Your Property When Filing Bankruptcy in Kentucky

Getting Your Fresh Start Through Bankruptcy

U.S. Dept of Justice Debtor Audit Information

If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905

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